S.O.S. at KCTS

'Opaque' finances lead a production consultant to call for the CEO's resignation.

Last fall, troubled KCTS-TV, Channel 9, brought in a veteran broadcast consultant from Los Angeles to work on production. After spending two months at the station, the consultant, Vanessa Greene, had one big conclusion: President and CEO Burnill Clark should step down as president.

Greene, an independent producer and writer who once worked as an executive producer at CBS, says she delivered her recommendation in a one-on-one meeting with Clark. She suggested that he take a seat on the board, so the public TV station could take advantage of him on creative matters, but that he make way for someone who could get a grip on the station's finances, which struck her as oddly opaque. "After 25 years in production, I couldn't get a handle on it. That means something's not right," she says.

Clark thanked her for her work, and that was the end of that. The decades-long chief of KCTS is still there, even as new information emerges about the shaky state of the station's finances. The station is late on its rent, it has been borrowing from a bequest intended for certain kinds of programming, and it has asked the Bill and Melinda Gates Foundation for a waiver of matching fund requirements on a major capital grant. Meanwhile, according to KCTS board members, the station continues to owe about $3 million in back dues to the Public Broadcasting Service (PBS) and racked up another in a string of deficits for the last fiscal year, which ended June 30, 2002. (See "Negative Numbers at Channel 9," Dec. 4, 2002.)

KCTS was supposed to pay rent of roughly $229,000 at the end of last year to the Seattle Center, confirms center spokesperson Kym Allen. But, says station board chair Doug Beighle: "We had a meeting with the city in December and indicated we're having a tight cash- flow situation." KCTS and the city are still in negotiations on a deferral plan, which Beighle says he expects to conclude in the next week.

Both Beighle and Clark (who responded in writing to questions) also confirm for the first time that the station has repeatedly borrowed from an approximately $900,000 bequest left by a former Boeing engineer named Sperry Goodman who died in 1998. "It's probably been borrowed against and paid back more times than I remember," says Beighle. "It's used for stopgapcovering cash flow."

Station insiders have long whispered speculation that the bequest was used for other purposes than Goodman intended. In his will, he wrote that the donation should "be used to develop educational programming and documentaries relating to the physical sciences and mathematics," according to a statement about Goodman that was written by his sister, Elizabeth Hantel, who lives in Arizona.

Beighle and Clark maintain that borrowing from the fund is perfectly in keeping with the intended use of creating science and math documentaries. "We know it's being spent for that, since that is what the station is primarily doing," says Beighle. Hantel says she's not in a position to complain since the bequest was vaguely worded.

STILL, AS BEIGHLE indicates, the borrowing reflects the station's pressing need of cash, something that also arose in the station's dealing with the Gates Foundation. In 1999, the foundation committed to a multiyear grant of $11 million for capital costs associated with the station's conversion to digital broadcasting.

The money was made contingent upon a 50 percent match to be raised by the station, according to Bill Gates Sr., the foundation's chair. (For every Gates dollar, the station was supposed to raise 50 cents.) Gates says that for the payment delivered in April, the station asked to use its matching fund for purposes other than digital conversion. The foundation said no. It is, however, waiving any matching fund requirement for the last installment of $1.7 million, which is to be delivered shortly.

Clark explains the requests by saying that the station had purchased equipment more cheaply than expected and wanted to use matching funds for "other areas of the digital campaign." Beighle adds that they merely wanted "flexibility" to use the matching money for things like digital programming and says the requests "had nothing to do with cash."

That stands in contrast to Gates' understanding of the matter, which led him to grant the second request. "They needed cash relief," he says.

Just how bad the picture is isn't entirely clear, in part because of the opaque nature of KCTS's finances that consultant Vanessa Greene talks about. For instance, she noticed "discrepancies" related to the production budgets she looked at. Employees were working on more than one show at a time, and yet their full salaries showed up on each individual show's budget. "The question is, where does the money go?" she asks.

All these things added together make for a disturbing pattern, says Jude Rosenberg, who spent 10 years at the station as chief financial officer before she left in 1997. During that time, she says, the station was never late on its rent or behind on PBS dues, and it kept three months of operating costs in reserve. "There's a multitude of reasons why stuff happens," she says, recognizing that these are tough times for fund-raising. "But the important thing is that the overall state of the station is in decline, and these are just symptoms. Why hasn't the board stepped up to the plate and tried to turn the station around?"

Board chair Beighle, however, suggests a rosier picture. As of December, he says, the station's revenues exceeded its expenses. And after cutting $1.8 million from a working budget for the current fiscal year ending in June, the board approved a break-even budget. What remains to be seen is whether they can stick to it.